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On 15 January 2016, the Belgian Council of Ministers gave its approval for the creation of a new Finexpo instrument: the grant for technical assistance. Technical assistance is an instrument whereby tied aid is allowed, even in countries where aid is generally untied.
Technical assistance related to an investment project in a developing country consists of services that:
- enable civil servants, labourers and clerical workers from the recipient country to build expertise related to an investment project
- take the form of technical training, advice and support by personnel from the donor country.
Criteria for assessing applications for a grant for technical assistance
The reasoned and well-documented application for a grant for technical assistance must be made on a specific application form.
The criteria for making an application for a grant for technical assistance are given below:
- The grant can only be obtained by a Belgian firm;
- The client must be a public institution;
- The maximum amount of funding is 1 million Special Drawing Rights (SDR) or 3% of the contract amount. The lower of these amounts is used as the maximum threshold.
Belgian companies may only apply for the grant for technical assistance for services:
- related to investment projects performed by the same Belgian company that are financed by untied aid;
- related to investment projects performed by the same Belgian company that are financed under commercial conditions.
Therefore the grant for technical assistance cannot be combined with an interest rate rate bonification or a tied State to State loan. However, it can be combined with an untied State to State loan or interest stabilisation.
Example of technical assistance
A Belgian company that wishes to export buses on a commercial basis to a developing country can apply for a grant for technical assistance. With this grant, the Belgian company can train local bus drivers, without having to put the cost of training in the contract. The company can therefore lower its prices which gives a competitive advantage compared to other foreign competitors. The same applies if the company participates in an international tender in the context of untied aid. The company can take the training out of their tender, reduce their prices, thereby achieving a competitive advantage.
Documents for technical assistance
For projects for which a grant for technical assistance is applied for, companies must compile a dossier on the basis of a questionnaire. The economic aspects of the project and its relevance for development can be examined on the basis of this questionnaire.
The Finexpo Committee will examine the dossier and deliver an opinion to the Minister for Foreign Trade. The minister will then decide whether or not to grant an interest rate subsidy.
The minister’s favourable decision takes the form of a promissory note, which is a document that is sent to the bank and/or the exporter and guarantees state intervention for a period of one year, twice renewable, i.e., three years altogether.
If the transaction is concluded within this three-year period, a Ministerial Decree is assigned to the exporter’s bank to formalise the granting of the technical assistance.